A “proliferation” of industry associations is holding the financial advice sector back from being perceived as professional, the Australian Securities and Investments Commission (ASIC) warns.

In its submission to the Parliamentary Joint Committee on Corporations and Financial Services, the regulator says membership of bodies such as the Financial Planning Association and the Association of Financial Advisers overlaps.

“In our view, the proliferation of industry associations is an impediment to the professionalisation of the advice industry, because fragmented representation is inconsistent with a common identity,” the submission says.

“While there are people working in the financial advice industry who are professionals, the financial advice industry as a whole is not currently a profession. We consider that significant changes are required to shift the culture of the industry from a transaction-based sales force to an advice profession, offering trusted advice that has the confidence of society.”

ASIC says advisers must put clients’ best interests first to be regarded as professional.

The regulator also highlights remaining areas of conflicted remuneration as a barrier to professionalism. It gives the life insurance industry as an example, despite its payment model being exempt from the Future of Financial Advice reforms.

“We consider that the financial advice industry has a significant amount of work to do to improve the conduct and culture of financial advisers and to move from a sales-based culture to a profession exercising independent judgement in the best interests of their clients.

“While many industry associations have codes of ethics and codes of conduct, in our experience these are not rigorously followed, investigated or enforced by the industry associations.”

The parliamentary committee is investigating standards in the financial services industry.